Summary: The final two unions reported their vote results and there is no threat of an immediate rail strike, until December 9th. Shippers should be prepared for service cuts before the deadline for sensitive freight, such as high security, high value, and temperature-controlled shipments.
On Monday, November 21st the two final unions reported their vote results. The largest union, SMART Transportation Division, rejected the tentative deal that was agreed upon in September, becoming the fourth union to reject the deal. Eight unions ratified the proposed deal from September. The four unions that rejected the deal: Brotherhood of Maintenance of Way Employees Division of the International Brotherhood of Teamsters (BMWED), Brotherhood of Railroad Signalmen (BRS), The International Brotherhood of Boilermakers (IBB), and SMART Transportation Division (SMART-TD) reported they are eager to negotiate a new a deal ahead of the deadline.
Three of the four unions agreed to a “status quo” period to continue operating until December 9th, with the Brotherhood of Railroad Signalmen whose deadline is December 4th. It is likely they will extend their deadline to December 9th to align with the other unions. If a deal is not reached by December 9th, the unions plan to go on strike, disrupting both rail and intermodal networks and could cause capacity constraints across all other modes of transportation.
There are two options to avoid a strike if a deal is not reached by the deadline:
The Biden administration will attempt to broker a deal between the two sides to avoid a strike, like the outcome in September.
Congress will step in, pass legislation, and force the two sides to agree on the tentative deal reached in September or an alternate deal, such as the one proposed by the Presidential Emergency Board.
Impact to service in September
In September, the intermodal (IM) mix in the Breakthrough Ecosystem dropped considerably (see the chart below) and rail cars were stalled in preparation for a potential strike. This was short-lived, however, as shippers increased their IM volume quickly once a tentative deal was reached. The service cuts took approximately two weeks to resume at full capacity. Even if a strike does not occur in December, we can expect to see a similar reaction to what we experienced in September.
Breakthrough will provide further guidance on these market developments as December 9 approaches, including during our Freight Advisor webcast on December 7 at 2 P.M. CST. If you have a question or comment, please contact the Applied Knowledge team at AppliedKnowledge@BreakthroughFuel.com.
